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Georgia Gulf to Trade Under $1
Georgia Gulf Corp. (GGC - Snapshot Report) overpaid for the acquisition of Royal Plastics, a supplier of housing products. The acquisition was entirely financed with debt, and the company is in danger of violating debt covenants.
The remaining product lines of the company are suffering from overcapacity. GGC is expected to report losses in the near term on the back of rising feedstock and energy costs. Demand for the company's products is also expected to remain weak due to the downturn in the US housing and auto markets.
Moreover, the company may need to sell its assets to comply with the debt covenants. As a result, we have a Sell rating with a target of $0.80.
Read the full analyst report on GGC
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| Market Summary | Jul 31, 2010 13:25 pm ET |
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